Money incentive Swine flu vaccine
Drugmakers, Doctors Rake in Billions
Battling H1N1 Flu
Swine Flu Is Bad for Victims, But Good for Businesses That Cater to
Published on Wednesday, October 14, 2009 by ABC News
by Dalia Fahmy
Americans are still debating whether to roll up their sleeves for a
swine flu shot, but companies have already figured it out: vaccines
are good for business.
[(ABC News)](ABC News)
Drug companies have sold $1.5 billion worth of swine flu shots, in
addition to the $1 billion for seasonal flu they booked earlier this
year. These inoculations are part of a much wider and rapidly growing
$20 billion global vaccine market.
"The vaccine market is booming," says Bruce Carlson, spokesperson at
market research firm Kalorama, which publishes an annual survey of
the vaccine industry. "It's an enormous growth area for
pharmaceuticals at a time when other areas are not doing so well," he
says, noting that the pipeline for more traditional blockbuster drugs
such as Lipitor and Nexium has thinned.
As always with pandemic flus, taxpayers are footing the $1.5 billion
check for the 250 million swine flu vaccines that the government has
ordered so far and will be distributing free to doctors, pharmacies
and schools. In addition, Congress has set aside more than $10
billion this year to research flu viruses, monitor H1N1's progress
and educate the public about prevention.
Drug makers pocket most of the revenues from flu sales, with
Sanofi-Pasteur, Glaxo Smith Kline and Novartis cornering most of the
market. But it's not just drug makers who stand to benefit. Doctors
collect copays for injecting shots and use them to cover office
expenses and insurance. Pharmacies also charge co-pays or full price
of about $25 to those without insurance and often make more money if
patients end up shopping for other goods.
"Flu shots present a good opportunity to bring new customers into our
stores," says Cassie Richardson, spokesperson for SUPERVALU, one of
the country's largest supermarket chains. Drawing customers to the
back of a store, where pharmacies are often located, offers retailers
a chance to pitch products that might otherwise go unnoticed.
Even companies outside of the medical industry are benefiting: the
UPS division that delivers vaccines in specially designed containers,
for example, has seen a bump in business.
New Entrants in Flu Shot Business
The intensifying competition has irked some doctors.
"Retailers and other non-medical professionals have siphoned off the
passive income that once helped to cover medical overhead," says Dr.
Caroline Abruzese,an internist in Atlanta. "The larger retail chains
can invest up front in large volumes of vaccine at low prices, and
market to customers already in their stores."
The promise of profits has attracted new players into the business.
Some of the world's largest drug makers, who in the past avoided the
vaccine market because of its limited scope -- its not easy to
convince healthy adults to get a shot for measles -- are now jumping
into the fray.
Last month alone saw three large vaccine deals. Abbott Labs bought a
Belgian drug business, along with its flu vaccine facilities, for
$6.6 billion. JJohnson & Johnson invested $444 million in a Dutch
biotech firm that makes and develops flu vaccines. Merck, which
already makes vaccines for singles and other diseases, struck a deal
to distribute flu shots made by Australian CSL.
Smaller biotechs are also angling for a slice of the action, making
vaccines one of the fastest-growing areas of research in the biotech industry.
Large and small drug makers are drawn to the business largely because
of scientific advances which promise to radically expand the range of
health problems that vaccines can address. In addition to preventing
childhood diseases such as measles and polio, vaccines can now also
ward off cervical cancer, and researchers are working on vaccines for
HIV and tuberculosis.
Scientists believe they can create therapeutic vaccines than treat
diseases such as Alzheimers and diabetes after they have set in. (At
least one company is betting on a vaccine that helps cigarette smokers quit.)
"These innovations broaden the market potential for vaccine makers
and party explained the renewed interest by drug makers," says
Anthony Cox, a professor at Indiana University's Kelley School of
Business who specializes in the marketing of medical products.
Alternatives to Vaccines Are Few
While this promise of new treatments for painful diseases brings hope
to many, vaccines continue to attract critics. The National Vaccine
Information Center, a non-profit advocacy group, is at the forefront
of a movement demanding that vaccines be tested more thoroughly
before hitting the market. Although there has been little evidence to
support their claim, detractors -- including the comedian Jim Carey
-- believe that vaccines are at least partly to blame for the sharp
rise in autism in recent decades.
The swine flu vaccine has also attracted its share of critics. Frank
Lipman, a New York-based doctor who specializes in a mix of Western
and alternative medicine, points out that the swine flu is rarely
fatal and that it's too early to tell if it's safe because it hasn't
been widely tested.
Others argue that Americans have little choice. The cost of a
widespread pandemic, similar to Spanish Flu outbreak in 1918 which
killed 675,000 Americans (and 50 million worldwide), would be
devastating. The Trust for America's Health, a Washington-based
non-profit organization, estimates that a severe pandemic could push
down GDP by more than 5 percent and cost Americans $683 billion.
"Were not seeing a pandemic that's this severe," says Jeff Levi,
director of Trust for Americas Health. "We've dodged a lot of bullets